Cost Challenges in Developing New Oncology Drugs

Kathy Boltz, PhD
Published: Wednesday, Dec 04, 2013
Joseph DiMasi, PhD

Joseph DiMasi, PhD

The increased cost of new branded oncology drugs continues to receive much negative press.1-4 Recent editorials have criticized the high cost of new cancer therapies, and their less than stellar improvements in efficacy, over already existing, lower-cost treatment options. Such critics have argued that little or no correlation between drug efficacies and pricing exists. One editorial, in particular, explained the decision of Memorial Sloan-Kettering Cancer Center to exclude the recently approved Zaltrap [ziv-aflibercept; Sanofi/ Regeneron] from its formulary due to its high cost, and because major clinical practice guidelines agreed that it is no more effective than the already existing, lower cost drug Avastin [bevacizumab; Genentech] for patients with advanced, metastatic colorectal cancer.1 Zaltrap had been priced at an average of about $11,000 a month, while Avastin costs less than half that at around $5000 per month. Subsequently, Sanofi discounted the net cost of Zaltrap by 50% in the United States in response to market resistance.5

Amid concerns with the high cost of new oncology drugs, a relevant question is what does it actually cost to bring a new innovative oncology treatment from its infancy stages to commercialization? During the 1990s, the research and development cost per approved oncology drug was estimated to be 20% higher than non-oncology drugs: around $1024 million for oncology versus $868 million for all drugs.6 In the past decade, prices for new branded oncology drugs have nearly doubled from about $5000 per month to over $10,000 per month. As recently as 2003, the cost of developing a new drug in all therapeutic areas was estimated at nearly $1 billion.7

In 2007, a review of the economics of new oncology drug development found that 71% of oncology drugs received priority review status from the Food and Drug Administration versus 40% of other new drugs receiving priority status (from 1997 to 2005).8 The oncology drugs had longer clinical development times from start of testing to market approval and were likely to be tested in many more uses before first marketing approval than the other categories. Before original approval for marketing, 57% of oncology drugs were investigated for multiple indications, with 32% tested in at least four indications. These factors affect the full-capitalized cost per approved drug.

According to Joseph DiMasi, PhD, of Tufts Center for the Study of Drug Development, robust data specific to current oncology drug development costs are lacking. Given the generally large expenses of oncology drug treatment, according to DiMasi, most economic experts believe that per patient costs for oncology drug trials are relatively very high. “However,” he said, “the net effect on relative costs is unclear as costs depend on how many indications are pursued.”

Challenges of Phase III Trials

Generally, phase III trials are the most expensive development phase for any drug. Oncology drugs, in particular, are plagued by a high failure rate after entering phase III, which leads to higher average development costs. From 2004 to 2011, the overall rate of transitioning from phase I to FDA approval was 6.7% for oncology, while it was 12.1% for all other therapeutic areas.9 The big drop in phase III success for oncology trials is the primary driver of this two-fold difference. As little as 45% of oncology therapeutics progress from phase III to NDA/ BLA versus 64% for all other areas.

Gisela Schwab, MD

Gisela Schwab, MD

One challenge in oncology drug development is that endpoints in phase II trials are not welldefined and do not readily translate into phase III designs, which is very different from other therapeutic categories such as infectious disease or lipid-lowering drugs.9 While areas like infectious disease have highly quantifiable markers like viral load that have direct, predictive value for phase III, oncology allows phase II trials to be set up to only gain initial evidence to justify more rigorous, quantitative investigation.

“The difference in endpoints between phase II and phase III account for a large number of failures in phase III since response rate or progression-free survival (PFS) does not always predict for benefit in overall survival,” explained Mohammad Azab, MD, MSc, MBA, Chief Medical Officer of Astex Pharmaceuticals. Although overall survival (OS) is considered by payers, especially, as the gold standard endpoint, it is rare to get solid OS data in phase II.

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